G4S's second-largest shareholder Harris votes against ISS deal

The second largest shareholder in G4S has confirmed it has voted against the
controversial £5.2bn acquisition of ISS, leaving one of the biggest
takeovers by a British company since the recession hanging by a thread.

Harris owns 6pc of G4S and is the second largest shareholder behind PrudentialPhoto: VisMedia

In a brief statement, the respected chief investment officer of Harris Associates, David Herro, said he "cannot support" the acquisition of catering and cleaning company ISS.

The US fund manager joins a growing list of confirmed dissenters against the deal, including Parvus, Schroders, Artemis and the Co-Op. Between them, they own almost 15pc of G4S but privately other investors from the US, Denmark and UK have also expressed concerns.

On Monday night, G4S's board met to decide whether to press ahead with the deal.

Harris owns 5pc of G4S and is the second largest shareholder behind Prudential.

Mr Herro said: "Despite the fact we have a great deal of respect for Nick Buckles and the G4S management team, we cannot support the acquisition of ISS under the stated terms and have voted no."

Chief executive Nick Buckles was understood to be having last gasp discussions with investors on Monday in an attempt to salvage the deal, while advisers held meetings after the afternoon deadline for proxy votes passed.

G4S needs 75pc of voters to support the deal at a shareholder meeting on Wednesday, meaning the proposed acquisition of ISS is in serious doubt and the company is under pressure to scrap the vote.

Mr Buckles could decide to press ahead with the meeting, if he believes other shareholders will support him, or alternatively scrap the deal, or seek to renegotiate terms with ISS. A spokesman insisted the company is "following the process that we set out on 17 October and continuing to meet shareholders ahead of the general meeting".

Kames Capital, formerly known as Aegon, said that it was backing the deal. In an emailed statement on Monday night, the fund manager, which owns 1.6pc of G4S, said: "I can confirm that we have met with the company and we believe the underlying business is very strong. We believe the deal will go through and the combined group will be well positioned going forward."

However, other shareholders have been rattled by the £2bn rights issue and £3.7bn debt facility required to finance the deal. They also fear the company is overstretching itself strategically and that G4S should focus on its core business of security.

Another top 20 shareholder said Mr Buckles had appeared to be a "man under pressure" in meetings. "He has been surprised at the [shareholder] reaction, which I find interesting," they added.